What Is Human Resources Software?

Human resources (HR) software solutions make managing a large or growing workforce more efficient. Vendors and buyers alike often refer to this category of software as human resources information systems (HRIS), human resources management systems (HRMS) or human capital management (HCM) software (though if you want to get specific, each of those categories has its own nuances).

What all HR solutions have in common is their ability to streamline the traditional HR functions of benefits administration, personnel tracking and payroll. But in addition to increasing your productivity by automating many of these administrative processes, HR software can also support you on a strategic level, by helping you to recruit, develop and manage your company’s most valuable resource: its people.

Overview of HR Applications

Industry watchers break down the field of HR software into three main categories: Core HR, Workforce Management and Strategic HR—also called Talent Management or Talent Administration software.

Core HR encompasses the three traditional human resources management functions: benefits administration, personnel tracking and payroll. Every company will require these functions once it has reached a critical mass of employees. You need core HR functionality when, for instance, manually running payroll and managing employees with spreadsheets becomes too burdensome a task.

Workforce management, or Workforce administration as it is also called, comprises the range of software solutions intended to effectively schedule and track your workforce. These solutions are ideal for organizations whose employees work in shifts, and include applications to track time and attendance, monitor compliance with labor laws and usually include payroll functionality, or integrate well with other payroll software. It's important to note that there are industry-specific systems that offer attendance functionality outside of human resources software. Specifically, school administration software provides education organizations a means of tracking student attendance. This can include providing online portals for parents and teachers to monitor attendance online.

Strategic HR involves growing your company by attracting and developing the best people, as well as better managing your workforce overall. Strategic HR applications generally provide some combination of applicant tracking and recruiting, learning management as well as performance review functionality. This type of software streamlines these strategic processes to ensure that a company is using its staff as efficiently as possible, and also that employees are continuing to grow and develop—increasing employee satisfaction and retention rates.

Of course, core HR, workforce management and strategic HR functions often overlap. While there are best-of-breed solutions for individual functions in each category, there are also integrated suites boasting across-the-board functionality.

Provides a centralized database that lets recruiters store applicant information and employment applications throughout the application process. Features include candidate tracking, applicant status monitoring and direct integration with other HR applications. In addition, many vendors include on-boarding features, like the ability to perform background checks. Example vendors: iCIMS, MarketRate, NuViewHR.

Also known as performance review software, these applications offer a centralized system where supervisors can conduct and track reviews with employees. Features performance measuring, tracking and goal management. Example vendors: Empower by ECI, Cornerstone CSB, People-Trak.

Establishes a centralized hub to monitor new employee training and the ongoing skills development of existing employees. Features include content authoring and management, curriculum and certification path definition, testing and reporting. Example vendors: Prosperity LMS, Halogen Talent Management Suite, SmartTeam.

What Type of Buyer Are You?

Given the wide variety of popular HR software available, the task of choosing one solution is daunting. To help you narrow the field, below we present four common buyer goals. One or more of these goals might align with your needs.

Streamline HR administrative tasks. If you’re a small to medium-sized company with no HR software, or you are using a few standalone solutions that you want to consolidate, you should consider an integrated HR suite. This will automate your more basic HR functions with a single system. Representative vendors: Sage HRMS, SAP - HR, Vista HRMS.

Boost efficiency when recruiting and hiring candidates. If you need to scale your workforce quickly, a best-of-breed recruiting and applicant tracking solution might be your best option. Many of these solutions can automatically post jobs to job boards and social media outlets, in addition to simplifying candidate tracking and on-boarding of new employees. With searchable databases of candidates and robust reporting capabilities, you can make the most of your current candidate pool, while expanding your talent base. Representative vendors: SuccessFactors, COMPAS, GoHire.

Manage a large pool of employees working in shifts. If you are faced with the task of staffing a workday with multiple shifts to assign and time-off requests to approve—such as the shift-work found at hospitals, grocery stores or restaurants—and need better tools to track your workforce, you need to build up the workforce administration pillar of your HRIS. Many solutions either feature a built-in payroll system to help when running massive payrolls, or integrate effectively with your current payroll software to ensure all hours worked by employees are compensated. Representative vendors: LaborView, TimeAttend, TimeForce.

Develop your workforce. You want to ensure that your best employees are recognized and rewarded so they stay with your company and continue to do great work. The broad category of talent management solutions help you do that, with everything from performance appraisal solutions, to systems for gathering peer feedback, to employee training tools. Benefits include increased retention rates, higher morale and greater employee productivity. Representative vendors: Halogen Talent Management Suite, Kenexa2x, NuView HR.

Market Trends to Understand

As you evaluate a human resources management system, it is helpful to understand a few current trends in this industry.

Consolidation of cloud-based HR software start-up vendors. Recently, there has been a trend in the HR software world toward consolidating as many applications as possible under one vendor. As such, companies have focused on developing integrated suites that allow HR departments to track an employee’s entire life cycle within an organization.

To that end, many best-of-breed providers have been acquired by larger vendors looking to extend the breadth of their integrated suite solutions. For instance, in 2012, SAP acquired SuccessFactors; Oracle bought Taleo (one of SuccessFactors’ competitors) and Salesforce.com completed its integration of Rypple, a social performance platform.

For buyers, this offers the opportunity to benefit from larger corporate resources, but it can also lead to disruptions as acquired companies are integrated and product offerings are rationalized. In anticipation, buyers should lock in rates and service/maintenance terms in their contract as this can save them a headache down the line.

Adoption of software as a service. HR software vendors have widely embraced the Software-as-a-Service (SaaS), or “Web-based,” deployment method. SaaS applications are easily implemented and updated, and can be accessed by HR staff and employees from almost any device with an Internet connection. Although most SaaS applications allow for some level of customization, it is important to realize that customization options to support your company’s unique needs can be somewhat limited.

Vendors such as TimeForce allow employees to request time-off through their Web-based system

Consumerization of HR software technology. A major shift in the development of enterprise software has been the emergence of consumer markets as a primary source of technology innovation—a trend called consumerization. From social media as a recruiting tool to mobile apps for managing HR on the go, consumer technologies are changing the way HR technology is being used. Vendors are beefing up collaborative capabilities in their systems and developing more intuitive user interfaces. When selecting the human resources system that’s best for you, third-party reviews of product features are a great way to distinguish which vendors will deliver.

Vendors such as Bullhorn feature mobile accessibility

Recent Events You Should Know About

Kronos acquires Empower Software. In January 2016, HR software vendor Kronos Incorporated announced their acquisition of Empower Software Solutions, extending their reach in the human capital management and retail software markets. Through the deal, Kronos adds nearly 1,000 organizations to its customer base.

Affordable Care Act (ACA) employer mandate goes into effect. In 2016, all businesses with 50 or more full-time equivalent employees must offer qualified health insurance or face penalties as part of continued ACA mandates. In response, many software vendors, such as ADP, have added ACA resources and applications to help clients remain compliant.

HR software focus turns to internal employees, engagement. With talent pools drying up, many businesses are investing in technology to retain current employees, and vendors are responding in turn. Expect applications for things such as performance management, training, succession planning and employee feedback and engagement to continue to grow in 2016.